Income Tax rules for new financial year (2019-20): Key points

The interim Budget introduced certain key changes in the tax rules for the financial year 2019-20. These changes came into effect from April 1, 2019.

2. No tax on income below Rs 5 lakh

No need to pay tax if your net taxable income does not exceed Rs 5 lakh. Tax rebate under section 87 has been hiked to Rs 12,500, thereby making income up to Rs 5 lakh tax free.

3. What if income exceeds Rs 5 lakh

If net income exceeds threshold limit even by a rupee, the rebate will vanish. However, a person with an income above the basic exemption limit of Rs 2.5 lakh will still have to file income tax return (ITR).

4. Hike in standard deduction

Standard deduction has been raised from Rs 40,000 to Rs 50,000.

5. When standard deduction was reintroduced

When standard deduction was reintroduced in 2018, the government had removed the tax exemption to transport and medical reimbursements, thereby reducing the benefit of the change.

6. ​No tax on notional income

Till last year, a person who owned a second house property and it was vacant — was taxed for the notional rent from the property. However, this year onwards there is no tax on such notional income.

7. What is new TDS threshold

Tax Deducted at Source (TDS) will apply only when interest from Fixed Deposits (FDs) and Recurring Deposits (RDs) exceeds Rs 40,000 a year.